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U.S. stocks gain on dovish Bernanke speech, Dow rises 0.69%

Stock Markets Aug 31, 2012 04:19PM ET
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Investing.com - U.S. stock prices rose on Friday after Fed Chairman Ben Bernanke said in a speech the Fed remains poised to simulate the economy if it doesn't improve soon.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.69%, the S&P 500 index was up 0.51% while the Nasdaq Composite index was up 0.60%.

Bernanke said in his speech at the Fed's annual symposium in Jackson Hole, Wyoming, that the Fed remains ready to intervene with stimulus measures, and even though the speech made no mention for more specific plans, stock rose on hopes for Fed action.

Monetary stimulus tools tend to weaken the dollar by design, pushing down interest rates and sending stock prices rising a side effect.

Inflationary pressures to tend to rise down the road as well.

"The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant," Bernanke said in prepared remarks at his speech.

"Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market. Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."

Elsewhere, U.S. factory orders rose 2.8% in July from June, outpacing market forecasts for a gain of 1.9%.

Also in the U.S. the final reading for the Thomson Reuters/University of Michigan consumer sentiment index came to 74.3 in August, up from analysts' calls for 73.6, the preliminary reading for August and also July's final reading.

Meanwhile, the Chicago purchasing managers' index (PMI) fell more than expected in July, data showed on Friday.

In a report, research group Kingsbury International said that the Chicago PMI fell to a seasonally adjusted 53.0, from 53.7 in the preceding month.

Analysts had expected the Chicago PMI to fall to 53.5 last month.

Leading Dow Jones Industrial Average performers included Intel, up 2.35%, American Express, up 2.05%, and Microsoft, up 1.72%.

The Dow Jones Industrial Average's worst performers  included Merck, down 0.09%, AT&T, down 0.05%, and Pfizer, up 0.08%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 1.54%, France's CAC 40 rose 1.00%, while Germany's DAX 30 finished up 1.09%. Meanwhile, in the U.K. the FTSE 100 fell 0.14%.  







U.S. stocks gain on dovish Bernanke speech, Dow rises 0.69%
 

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